**Exhibit 10.1**

 

**EMPLOYMENT AGREEMENT**

 

This Employment Agreement (this “***Agreement***”) is made and entered into as of February 4,2003 by and between Intrusion Inc., a Delaware corporation (including any ofits subsidiaries or any parent corporation, the “***Company***”), and Aaron Bawcom, an individual(the “***Executive***”).

 

**RECITALS**

 

**WHEREAS**,Executive is currently a Vice President of the Company; and

 

**WHEREAS**,the Company and the Executive have determined that it is in their respectivebest interest to enter into this Agreement on the terms and conditions as setforth herein.

 

**NOW,THEREFORE,** in consideration of the premises and themutual covenants and promises contained herein, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto hereby agree as follows:

 

**AGREEMENT**

 

1.**               EMPLOYMENTTERMS AND DUTIES**

 

1.1                                 **Employment.**  The Company hereby employs Executive, andExecutive hereby accepts continued employment by the Company, upon the termsand conditions set forth in this Agreement.

 

1.2                                 **Duties.**  Executive shall continue to serve as VicePresident or any other similar duties the Company may assign Executive.

 

1.3                                 Duringthe term of Executive’s employment hereunder, Executive shall devote his fullworking time and efforts to the performance of his duties and the furtheranceof the interests of the Company and shall not be otherwise employed.  Notwithstanding the above, Executive mayserve as a director or trustee of other organizations; engage in charitable,civic, and/or governmental activities; provided that such service andactivities do not prevent Executive from performing the duties required ofExecutive under this Agreement and further provided that Executive obtainswritten consent for all such activities from the Company, which consent willnot be unreasonably withheld.  Executivemay engage in personal activities, including, without limitation, personalinvestments, provided that such activities do not interfere with Executive’sperformance of duties hereunder and/or the provisions of Executive’s writtenagreements with the Company.

 

1.4                                 **Term.**  Subject to the provisions of Section 1.5and Section 1.7 below, the term of Executive’s employment under thisAgreement shall commence this date and shall continue for a period of two (2)years (the “***Employment Term***”).

 

 

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1.5                                 **Compensationand Benefits.**

 

1.5.1                        **BaseSalary**.  Subject to theprovisions of Section 1.7 and in consideration of the services renderedto the Company hereunder by Executive; the Company shall, during the EmploymentTerm, pay Executive a salary at the annual rate of one hundred seventy fivethousand dollars ($175,000) (the “***Base******Salary***”), less statutory deductions and withholdings,payable in accordance with the Company’s regular payroll practices.  Base Salary shall be payable bi-weekly inaccordance with the Company’s normal payroll practices.

 

1.5.2                        **RetentionBonus.  **Executive shallbe paid, on or before February 21, 2003, a Retention Bonus of one-hundredseventy-five thousand dollars ($175,000), less statutory deductions andwithholdings, payable in accordance with the Company’s regular payrollpractices.    Retention Bonus shall vestratibly for 24 months.  UnearnedRetention Bonus shall be repaid by Executive to Company in the event ofvoluntary termination or termination for cause as defined in Section 1.6.2.If Executive is terminated by the Company without Cause, the Retention Bonusbecomes fully vested.

 

1.5.3                        **BenefitsPackage.**  In addition tothe Base Salary set forth in Section 1.5.1 and the Retention Pay setforth in Section 1.5.2, during the Employment Term, Executive shall beentitled to receive such employee benefits, vacation and holidays as may be ineffect from time to time as are afforded to other executives of the Company.

 

1.6                                 **Termination.**  Executive’s employment and this Agreement(except as otherwise provided hereunder) shall terminate upon the occurrence ofany of the following, at the time set forth therefor (the “***Termination Date***”):

 

1.6.1                        **Death orDisability.**  Immediatelyupon the death of Executive or the determination by the Company that Executivehas ceased to be able to perform the essential functions of his duties, with orwithout reasonable accommodation, for a period of not less than ninety (90)days, due to a mental or physical illness or incapacity (“***Disability***”) (termination pursuant to this Section1.6.1 being referred to herein as termination for “***Death or Disability***”); or

 

1.6.2                        **TerminationFor Cause.**  Immediatelyfollowing notice of termination for “*Cause*” (as defined below), specifying suchCause, given by the Company (termination pursuant to this Section 1.6.2being referred to herein as termination for “***Cause***”). As used herein, “*Cause*” means termination based onExecutive’s:

 

(a)          conviction or plea of “*guilty*”or “*nocontest*” to any crime constituting a felony in the jurisdiction inwhich committed, any crime involving moral turpitude (whether or not a felony),or any other violation of criminal law involving dishonesty or willfulmisconduct that materially injures the Company (whether or not a felony);

 

(b)         substance abuse that inany manner materially interferes with the performance of your duties;

 

(c)          breach of thisagreement;

 

(d)         misconduct thatmaterially discredits or damages the Company;

 

(e)          indictment for a felonyviolation of the federal securities laws; or

 

(f)            chronic absence fromwork for reasons other than illness or incapacity.

 

 

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1.6.3                        **OtherRemedies.**  Terminationpursuant to Section 1.6.2 above shall be in addition to and without prejudiceto any other right or remedy to which the Company may be entitled at law, inequity, or under this Agreement.

 

1.7                                 **Severanceand Termination. **In thecase of a termination of Executive’s employment hereunder for any reasonincluding and without limitation, termination without Cause, (i) Executiveshall not be entitled to receive payment of, and the Company shall have noobligation to pay, any severance or similar compensation attributable to suchtermination, other than Base Salary earned but unpaid, accrued but unusedvacation, vested benefits under any employee benefit plan, and any unreimbursedexpenses incurred by Executive as of the termination date, and (ii) theCompany’s obligations under this Agreement shall immediately cease.

 

 

2.               **REPRESENTATIONS AND WARRANTIES BY THE EMPLOYEE**

 

Executive represents and warrants to the Company that (i) thisAgreement is valid and binding upon and enforceable against him in accordancewith its terms, (ii) Executive is not bound by or subject to any contractual orother obligation that would be violated by his execution or performance of thisAgreement, including, but not limited to, any non-competition agreementpresently in effect, and (iii) Executive is not subject to any pending or, toExecutive’s knowledge, threatened claim, action, judgment, order, orinvestigation that could adversely affect his ability to perform hisobligations under this Agreement or the business reputation of the Company.

 

3.               **MISCELLANEOUS**

 

3.1                                 **Notices.**  All notices, requests, and othercommunications hereunder must be in writing and will be deemed to have beenduly given only if delivered personally against written receipt or by facsimiletransmission with answer back confirmation or mailed (postage prepaid bycertified or registered mail, return receipt requested) or by overnight courierto the parties at the following addresses or facsimile numbers:

 

If to the Executive, to:

Aaron Bawcom

10604 Birmingham Dr

Frisco, TX 75035

 

If to the Company, to:

Intrusion Inc.

1101 E. Arapaho Road

Richardson, Texas  75081

Facsimile:  (972) 234-1467

Attention:  Ward Paxton

 

3.2                                 **EntireAgreement.**  ThisAgreement supersedes all prior discussions and agreements among the partieswith respect to the subject matter hereof and contain the sole and entire agreementbetween the parties hereto with respect thereto.

 

3.3                                 **Waiver.**  Any term or condition of this Agreement maybe waived at any time by the party that is entitled to the benefit thereof, butno such waiver shall be effective unless set forth in a written instrument dulyexecuted by or on behalf of the party waiving such term or condition.  No waiver by any party hereto of any term orcondition of this Agreement, in any one or more

 

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instances, shall be deemed to be or construedas a waiver of the same or any other term or condition of this Agreement on anyfuture occasion.  All remedies, eitherunder this Agreement or by law or otherwise afforded, will be cumulative andnot alternative.

 

3.4                                 **Amendment. **This Agreement may be amended,supplemented, or modified only by a written instrument duly executed by or onbehalf of each party hereto.

 

3.5                                 **Change ofControl.** Upon Change of Control of the Company, unearnedRetention Bonus shall become fully vested.

 

3.6                                 **No ThirdParty Beneficiary.**  Theterms and provisions of this Agreement are intended solely for the benefit ofeach party hereto and the Company’s successors or assigns, and it is not theintention of the parties to confer third-party beneficiary rights upon anyother person.

 

3.7                                 **NoAssignment; Binding Effect.** This Agreement shall inure to the benefit of any successors or assignsof the Company.  Executive shall not beentitled to assign his obligations under this Agreement.

 

3.8                                 **Headings.**  The headings used in this Agreement havebeen inserted for convenience of reference only and do not define or limit theprovisions hereof.

 

3.9                                 **Severability.**  The Company and Executive intend allprovisions of this Agreement to be enforced to the fullest extent permitted bylaw. Accordingly, if a court of competent jurisdiction determines that thescope and/or operation of any provision of this Agreement is too broad to beenforced as written, the Company and Executive intend that the court shouldreform such provision to such narrower scope and/or operation as it determinesto be enforceable.  If, however, anyprovision of this Agreement is held to be illegal, invalid, or unenforceableunder present or future law, and not subject to reformation, then (i) suchprovision shall be fully severable, (ii) this Agreement shall be construed andenforced as if such provision was never a part of this Agreement, and (iii) theremaining provisions of this Agreement shall remain in full force and effectand shall not be affected by illegal, invalid, or unenforceable provisions orby their severance.

 

3.10                           **GoverningLaw. **This Agreementshall be governed by and construed in accordance with the laws of the State ofTexas applicable to contracts executed and performed in such State withoutgiving effect to conflicts of laws principles.

 

3.11                           **Jurisdiction.**  With respect to any suit, action, or otherproceeding arising from (or relating to) this Agreement, the Company andExecutive hereby irrevocably agree to the non-exclusive personal jurisdictionand venue of the United States District Court for the Northern District ofTexas (and any Texas State Court within Dallas County, Texas).

 

3.12                           **Counterparts.**  This Agreement may be executed in any numberof counterparts and by facsimile, each of which will be deemed an original, butall of which together will constitute one and the same instrument.

 

**INWITNESS WHEREOF,** the parties hereto have caused thisAgreement to be executed on the date first written above.

 

 

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|   | **“COMPANY”**   |                |
|--------|---------------------------|---------------------|
|   |                      |                |   |
|   | INTRUSION INC.            |                |
|   |                      |                |   |
|   |                      |                |   |
|   | By:                       | /s/ G. Ward Paxton  |   |
|   |                      |                |   |
|   | Name:                     | G. Ward Paxton      |   |
|   |                      |                |   |
|   | Title:                    | President & CEO |   |
|   |                      |                |   |
|   | Date:                     | 2/4/03              |   |
|   |                      |                |   |
|   |                      |                |   |
|   | **“EXECUTIVE”** |                |
|   |                      |                |   |
|   | Aaron Bawcom              |                |
|   |                      |                |   |
|   | /s/ Aaron Bawcom          |                |
|   | Executive                 |                |
|   |                      |                |
|   |                      |                |
|   |                      |                |
|   |                      |                |
|   |                      |                |   |
|   |                      |                |   |
|   | Date:                     | 2/4/03              |   |
|        |                           |                     |  |  |  |  |  |  |

 

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